I wonder why the world's middle class is assumed to be in Western countries
while 85% of the world's population is in Third World (poor countries). While
the poor cannot challenge the riches of the richest shouldn't they try to
improve their lot thru globalization. It seems the opponents of globalization
are in developed countries (and middle income countries)
***There are no easy answers. The economic logic of free, globalised,
technologically sophisticated capitalism may well be to shift more wealth to
the very richest and some of the very poorest in the world, while squeezing
people in the middle.
Umesh
umesh sharma <[EMAIL PROTECTED]> wrote:
"Education is central to any economic strategy, but there is a limit to
what it can do for workers in their 40s and beyond. Nor can education be a
complete answer at a time when skilled computer programmers in India are paid
less than $2,000 a month."
The global middle cries out for reassurance By Lawrence Summers
http://www.ft.com/cms/s/89aac4dc-6777-11db-8ea5-0000779e2340.html
Published: October 29 2006 18:48 | Last updated: October 29 2006 18:48
Against all odds, we are living in a time of plenty. Neither the
after-effects of September 11 2001 nor a tripling in oil prices has prevented
the worlds economy from growing faster in the past five years than in any
five-year period in recorded economic history.
Given this recent performance and the pricing-in by world markets of an
optimistic outlook, one might have expected this to be a moment of particularly
great enthusiasm for the market system and for global integration.
Yet in many corners of the globe there is growing disillusionment. From the
failure to complete the Doha trade round to pervasive Wal-Mart-bashing, from
massive renationalisation in Russia to the success of populists in Latin
America and eastern Europe, we see a degree of anxiety about the market system
that is unmatched since the fall of the Berlin Wall and probably well before.
Why is there such disillusionment? Some anti-globalisation sentiment can be
seen as a manifestation of resistance to the US arising from the Bush
administrations foreign policy misadventures. But there is a much more
troubling source: the growing recognition that the vast global middle is not
sharing the benefits of the current period of economic growth and that its
share of the pie may even be shrinking.
Two groups have found themselves in the right place at the right time to
benefit from globalisation and technological change. First, those in low-income
countries, principally in Asia and especially in China, who are able to plug
into the global system. The combination of low wages, diffusible technology and
the ability to access global product and financial markets has fuelled an
economic explosion.
It is important to remember that the period between the late 18th and early
19th centuries in Britain and continental Europe was called the Industrial
Revolution for a reason. For the first time in human history, the standard of
living of one generation was demonstrably better than the one before: in a
single lifespan, real per capita incomes doubled and then doubled again. If one
looks at the growth rate of China during the past 30 years, living standards
are increasing at a rate that will lead to a hundred-fold improvement over a
single human lifespan. The impact cannot be overstated.
Second, it has been a golden age for those who already own valuable assets.
Owners of scarce commodities have seen their returns rise prodigiously. People
running businesses that can take advantage of globalisation to source labour
less expensively and sell to larger markets have seen their incomes rise far
faster than incomes generally. Certainly those in the financial sector in a
position to benefit from the asset revaluations associated with globalisation
have prospered.
Everyone else has not fared nearly as well. As the great corporate engines of
efficiency succeed by using cutting-edge technology with low-cost labour,
ordinary, middle-class workers and their employers whether they live in the
American midwest, the Ruhr valley, Latin America or eastern Europe are left
out. This is the essential reason why median family incomes lag far behind
productivity growth in the US, why average family incomes in Mexico have barely
grown in the 13 years since the North American Free Trade Agreement passed, and
why middle-income countries without natural resources struggle to define an
area of comparative advantage.
It is this vast group that lacks the capital to benefit from globalisation
and is desperately seeking either reassurance or a change in course. Yet
without its support it is very doubtful that the existing global economic order
can be maintained.
Let us be frank. What the anxious global middle is told often feels like
pretty thin gruel. The twin arguments that globalisation is inevitable and
protectionism is counterproductive have the great virtue of being correct, but
do not provide much consolation for the losers. Nor can they rally support for
policies that maintain, let alone promote, international integration.
Economists rightly emphasise that trade, like other forms of progress, makes
everyone richer by enabling them to buy goods at lower prices. But this offers
small solace to those who fear their jobs will vanish.
Education is central to any economic strategy, but there is a limit to what
it can do for workers in their 40s and beyond. Nor can education be a complete
answer at a time when skilled computer programmers in India are paid less than
$2,000 a month.
John Kenneth Galbraith was right when he observed: All of the great leaders
have had one characteristic in common: it was the willingness to confront
unequivocally the major anxiety of their people in their time. This, and not
much else, is the essence of leadership. Meeting the needs of the anxious
global middle is the economic challenge of our time.
In the US, the political pendulum is swinging left. The best parts of the
progressive tradition do not oppose the market system; they improve on the
outcomes it naturally produces. That is what we need today.
There are no easy answers. The economic logic of free, globalised,
technologically sophisticated capitalism may well be to shift more wealth to
the very richest and some of the very poorest in the world, while squeezing
people in the middle.
Just as the Federal Housing Administrations effort to make owner-occupied
housing more available after the second world war was a crucial part of the
policy approach that permitted the Marshall Plan to go forward, so also our
success in advancing international integration will depend on what can be done
for the great global middle.
Our response will affect not just the livelihoods of millions of our fellow
citizens but also the prospects for continuing global integration, with all the
prosperity and stability it has the potential to bring.
The writer is former US Treasury secretary
Umesh Sharma
5121 Lackawanna ST
College Park,
(Washington D.C. Metro Region)
MD 20740
1-202-215-4328 [Cell Phone]
Ed.M. - International Education Policy
Harvard Graduate School of Education,
Harvard University,
Class of 2005
weblog: http://jaipurschool.bihu.in/
website: www.gse.harvard.edu/iep
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Umesh Sharma
5121 Lackawanna ST
College Park,
(Washington D.C. Metro Region)
MD 20740
1-202-215-4328 [Cell Phone]
Ed.M. - International Education Policy
Harvard Graduate School of Education,
Harvard University,
Class of 2005
weblog: http://jaipurschool.bihu.in/
website: www.gse.harvard.edu/iep
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